The dollar tumbled against all majors after a set of disappointing US data releases. The dollar index fell to a fresh 10-month low of 95.25 immediately following the release. The weaker dollar boosted other majors as well as gold.
Both US CPI and retail sales numbers for June came in short of expectations, pushing the dollar to 112.38 yen from 113.04.
Headline CPI was weaker than estimated at 0.1% month-on-month in June, mirroring the prior increase of 0.1%. It was expected to increase by 0.2%. Meanwhile, year-on-year, CPI rose 1.6% versus a prior 1.9% and below the expected 1.7%. Core inflation maintained the momentum with a 1.7% year-on-year increase, as forecasted.
The US retail sales data ex-autos showed a 0.2% month-on-month decline in June, well below the expected 0.2% gain, but an improvement from the prior 0.3% fall. Total retail sales were also down by the same amount and the control group (ex-auto, gasoline, food service and building materials) declined 0.1%. There were some minor upward revisions to May’s total figure but not enough to offset the shortfall in June.
Today’s weak data along with the earlier dovish-perceived take on US monetary policy by Federal Reserve Chair Janet Yellen, confirms markets skepticism of another rate hike this year.
The dollar was additionally pressured by a report showing US consumer sentiment worsened in July. The preliminary University of Michigan index fell to 93.1 from June’s final reading of 95.1 and came in below the forecast of a 95.0 reading.
Aside from US data, investors also had their focus on Federal Reserve Bank of Dallas President Robert Kaplan (an FOMC voting member) who is scheduled to speak at a conference in Mexico today.
In the absence of notable economic data releases out of the UK and the eurozone, the US data release dictated most of the forex trading today. On the back of dollar weakness, the euro rose to $1.1451, while the pound breached above the 1.3000 level, hitting a two-month high. The Canadian dollar also gained with dollar/loonie dropping to 1.2682.
Oil prices continued gaining for the second consecutive day, rising by around 1% today. WTI and Brent got a boost in late European session following the news that Kuwait’s OPEC governor Haitham Al-Ghais said in an interview to Reuters that the market was on a recovery track due to increasing global demand.
Inversely related to the dollar, gold prices rose as the dollar plunged in early US trading hours. The precious metal was last trading just above $1,230.00 an ounce.